Wouldn’t it be a shame if HSBC raised money in a rights issue, only to lose it in a lawsuit? Instead of drooling over Citigroup’s Asian operations HSBC could be eyeing the courts instead. A group of Hong Kong investors sued Lehman Brothers and HSBC in the U.S. in their fight to recoup more than $1.5 billion after the Wall Street’s firm collapse left their bond holdings possibly worthless.
Thousands of local investors — among them retirees and pensioners who sunk their life savings in the products — have faced massive losses, provoking widespread anger, street protests, government probes and a push for tougher regulations in the Asian financial center.
Whether or not HSBC wants Citigroup’s Asian operations may be a moot point if HSBC angers everyone beforehand. The lawsuit argues HSBC failed to protect the collateral — securities now being held by divisions of both HSBC and Bank of New York Mellon Corp., also named in the suit — as well as the interests of investors. A Lehman financing unit involved in the transactions is now attempting to claim the collateral in Lehman’s bankruptcy case.
The class-action lawsuit filed in New York on Thursday night, 12 March 2009, marked a new, more contentious phase in Hong Kong’s dispute over products tied to Lehman Brothers Holdings Inc
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